G.R. No.
L-61647 October 12, 1984
REPUBLIC OF THE PHILIPPINES (DIRECTOR OF LANDS), petitioner,
vs.
THE HON. COURT OF APPEALS, BENJAMIN TANCINCO, AZUCENA TANCINCO REYES, MARINA TANCINCO
IMPERIAL and MARIO C. TANCINCO, respondents.
The Solicitor General for petitioner.
Martin B. Laurea for respondents.
GUTIERREZ, JR., J.:ñé+.£ªwph!1
This is a petition for certiorari to set aside the decision of the respondent Court of Appeals (now
Intermediate Appellate Court) affirming the decision of the Court of First Instance of Bulacan, Fifth
Judicial District, Branch VIII, which found that Lots 1 and 2 of Plan Psu-131892 are accretion to the land
covered by Transfer Certificate of Title No. 89709 and ordered their registration in the names of the
private respondents.
Respondents Benjamin Tancinco, Azucena Tancinco Reyes, Marina (should be "Maria") Tancinco Imperial
and Mario C. Tancinco are registered owners of a parcel of land covered by Transfer Certificate of Title
No. T-89709 situated at Barrio Ubihan, Meycauayan, Bulacan bordering on the Meycauayan and Bocaue
rivers.
On June 24, 1973, the private respondents filed an application for the registration of three lots adjacent
to their fishpond property and particularly described as follows: têñ.£îhqwâ£
Lot 1-Psu-131892
(Maria C. Tancinco)
A parcel of land (lot 1 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by Lot 3 of plan Psu-131892; on the SE., along lines 2-3-4, by
Meycauayan River; on the S.W., along fines 4-5-6-7-8-9, by Bocaue River; on the
NE., along line 9-10, by property of Joaquina Santiago; on the E., NE., and NW.,
along lines 10-11-12-1, by property of Mariano Tancinco (Lot 2, Psu-111877). ...
containing an area of THIRTY THREE THOUSAND NINE HUNDRED THIRTY SEVEN
(33,937) SQUARE METERS. ...
Lot 2-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 2 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the E.,
along line 1-2, by property of Rafael Singson; on the S., along line 2-3, by
Meycauayan River; on the SW., along line 3-4, by Lot 3 of plan Psu-131892; and on
the N., along line 4-1, by property of Mariano Tancinco (Lot 1, Psu-111877). ...
containing an area of FIVE THOUSAND FOUR HUNDRED FIFTY THREE (5,453)
SQUARE METERS. ...
Lot 3-Psu-131892
(Maria C. Tancinco)
A parcel of land (Lot 3 as shown on plan Psu-131892), situated in the Barrio of
Ubihan, Municipality of Meycauayan, Province of Bulacan. Bounded on the NE.,
along line 1-2, by property of Mariano Tancinco (Lot 1, Psu-111877); and along line
2-3, by Lot 2 of plan Psu-131892; on the S., along line 3-4, by Meycauayan River,
on the SW., along line 4-5, by Lot 1 of plan Psu-131892; and along line 5-6 by
property of Mariano Tancinco (Lot 2, Psu-111877), and on the NW., along line 6-1,
by property of Joaquina Santiago. ... containing an area of ONE THOUSAND NINE
HUNDRED EIGHTY FIVE (1,985) SQUARE METERS. ...
On April 5, 1974, Assistant Provincial Fiscal Amando C. Vicente, in representation of the Bureau of Lands
filed a written opposition to the application for registration.
On March 6, 1975, the private respondents filed a partial withdrawal of the application for registration
with respect to Lot 3 of Plan Psu-131892 in line with the recommendation of the Commissioner
appointed by the Court.
On March 7, 1975, Lot 3 was ordered withdrawn from the application and trial proceeded only with
respect to Lots 1 and 2 covered by Plan Psu-131892.
On June 26, 1976, the lower court rendered a decision granting the application on the finding that the
lands in question are accretions to the private respondents' fishponds covered by Transfer Certificate of
Title No. 89709. The dispositive portion of the decision reads: têñ.£îhqwâ£
WHEREFORE, it appearing that Lots 1 & 2 of plan Psu-131892 (Exh. H) are
accretions to the land covered by Transfer Certificate of Title No. 89709 of the
Register of Deeds of Bulacan, they belong to the owner of said property. The
Court, therefore, orders the registration of lots 1 & 2 situated in the barrio of
Ubihan, municipality of Meycauayan, province of Bulacan, and more particularly
described in plan Psu-131892 (Exh. H) and their accompanying technical
descriptions (Exhs. E, E-1) in favor of Benjamin Tancinco, married to Alma
Fernandez and residing at 3662 Heatherdown, Toledo, Ohio 43614 U.S.A.; Azucena
Tancinco Reyes, married to Alex Reyes, Jr., residing at 4th St., New Manila, Quezon
City; Marina Tancinco Imperial, married to Juan Imperial, residing at Pasay Road,
Dasmariñas Village, Makati, Rizal; and Mario C. Tancinco, married to Leticia
Regidor, residing at 1616 Cypress St., Dasmariñas Village, Makati, Rizal, all of legal
age, all Filipino citizens.
On July 30, 1976, the petitioner Republic appealed to the respondent Court of Appeals.
On August, 19, 1982, the respondent Court rendered a decision affirming in toto the decision of the
lower court. The dispositive portion of the decision reads: têñ.£îhqwâ£
DAHIL DITO, ang hatol na iniakyat ay sinasangayunan at pinagtitibay sa kanyang
kabuuan nang walang bayad.
The rule that the findings of fact of the trial court and the Court of Appeals are binding upon this Court
admits of certain exceptions. Thus in Carolina Industries Inc. v. CMS Stock Brokerage, Inc. (97 SCRA 734)
we held that this Court retains the power to review and rectify the findings of fact of said courts when
(1) the conclusion is a finding grounded entirely on speculations, surmises and conjectures; (2) when the
inference made is manifestly mistaken, absurd, and impossible; (3) where there is grave abuse of
discretion, (4) when the judgment is based on a misapprehension of facts; and (5) when the court, in
making its findings, went beyond the issues of the case and the same are contrary to the admissions of
both appellant and appellee.
There are facts and circumstances in the record which render untenable the findings of the trial court
and the Court of Appeals that the lands in question are accretions to the private respondents' fishponds.
The petitioner submits that there is no accretion to speak of under Article 457 of the New Civil Code
because what actually happened is that the private respondents simply transferred their dikes further
down the river bed of the Meycauayan River, and thus, if there is any accretion to speak of, it is man-
made and artificial and not the result of the gradual and imperceptible sedimentation by the waters of
the river.
On the other hand, the private respondents rely on the testimony of Mrs. Virginia Acuña to the effect
that: têñ.£îhqwâ£
xxx xxx xxx
... when witness first saw the land, namely, Lots 1 & 2, they were already dry
almost at the level of the Pilapil of the property of Dr. Tancinco, and that from the
boundaries of the lots, for about two (2) arms length the land was still dry up to
the edge of the river; that sometime in 1951, a new Pilapil was established on the
boundaries of Lots 1 & 2 and soil from the old Pilapil was transferred to the new
Pilapil and this was done sometime in 1951; that the new lots were then converted
into fishpond, and water in this fishpond was two (2) meters deep on the side of
the Pilapil facing the fishpond ... .
The private respondents submit that the foregoing evidence establishes the fact of accretion without
human intervention because the transfer of the dike occurred after the accretion was complete.
We agree with the petitioner.
Article 457 of the New Civil Code provides: têñ.£îhqwâ£
To the owners of lands adjoining the banks of rivers belong the accretion which
they gradually receive from the effects of the current of the waters.
The above-quoted article requires the concurrence of three requisites before an accretion covered by
this particular provision is said to have taken place. They are (1) that the deposit be gradual and
imperceptible; (2) that it be made through the effects of the current of the water; and (3) that the land
where accretion takes place is adjacent to the banks of rivers.
The requirement that the deposit should be due to the effect of the current of the river is indispensable.
This excludes from Art. 457 of the New Civil Code all deposits caused by human intervention. Alluvion
must be the exclusive work of nature. In the instant case, there is no evidence whatsoever to prove that
the addition to the said property was made gradually through the effects of the current of the
Meycauayan and Bocaue rivers. We agree with the observation of the Solicitor General that it is
preposterous to believe that almost four (4) hectares of land came into being because of the effects of
the Meycauayan and Bocaue rivers. The lone witness of the private respondents who happens to be
their overseer and whose husband was first cousin of their father noticed the four hectare accretion to
the twelve hectare fishpond only in 1939. The respondents claim that at this point in time, accretion had
already taken place. If so, their witness was incompetent to testify to a gradual and imperceptible
increase to their land in the years before 1939. However, the witness testified that in that year,
she observed an increase in the area of the original fishpond which is now the land in question. If she
was telling the truth, the accretion was sudden. However, there is evidence that the alleged alluvial
deposits were artificial and man-made and not the exclusive result of the current of the Meycauayan and
Bocaue rivers. The alleged alluvial deposits came into being not because of the sole effect of the current
of the rivers but as a result of the transfer of the dike towards the river and encroaching upon it. The
land sought to be registered is not even dry land cast imperceptibly and gradually by the river's current
on the fishpond adjoining it. It is under two meters of water. The private respondents' own evidence
shows that the water in the fishpond is two meters deep on the side of the pilapil facing the fishpond
and only one meter deep on the side of the pilapil facing the river
The reason behind the law giving the riparian owner the right to any land or alluvion deposited by a river
is to compensate him for the danger of loss that he suffers because of the location of his land. If estates
bordering on rivers are exposed to floods and other evils produced by the destructive force of the waters
and if by virtue of lawful provisions, said estates are subject to incumbrances and various kinds of
easements, it is proper that the risk or danger which may prejudice the owners thereof should be
compensated by the right of accretion. (Cortes v. City of Manila, 10 Phil. 567). Hence, the riparian owner
does not acquire the additions to his land caused by special works expressly intended or designed to
bring about accretion. When the private respondents transferred their dikes towards the river bed, the
dikes were meant for reclamation purposes and not to protect their property from the destructive force
of the waters of the river.
We agree with the submission of the Solicitor General that the testimony of the private respondents'
lone witness to the effect that as early as 1939 there already existed such alleged alluvial deposits,
deserves no merit. It should be noted that the lots in question were not included in the survey of their
adjacent property conducted on May 10, 1940 and in the Cadastral Survey of the entire Municipality of
Meycauayan conducted between the years 1958 to 1960. The alleged accretion was declared for
taxation purposes only in 1972 or 33 years after it had supposedly permanently formed. The only valid
conclusion therefore is that the said areas could not have been there in 1939. They existed only after the
private respondents transferred their dikes towards the bed of the Meycauayan river in 1951. What
private respondents claim as accretion is really an encroachment of a portion of the Meycauayan river by
reclamation.
The lower court cannot validly order the registration of Lots 1 & 2 in the names of the private
respondents. These lots were portions of the bed of the Meycauayan river and are therefore classified as
property of the public domain under Article 420 paragraph 1 and Article 502, paragraph 1 of the Civil
Code of the Philippines. They are not open to registration under the Land Registration Act. The
adjudication of the lands in question as private property in the names of the private respondents is null
and void.
WHEREFORE, the instant petition is GRANTED. The decision appealed from is hereby REVERSED and SET
ASIDE. The private respondents are ordered to move back the dikes of their fishponds to their original
location and return the disputed property to the river to which it belongs.
SO ORDERED.1
 THIRD DIVISION
[G.R. No. 108894. February 10, 1997]
TECNOGAS PHILIPPINES MANUFACTURING CORPORATION, petitioner, vs. COURT OF APPEALS
(FORMER SPECIAL SEVENTEENTH DIVISION) and EDUARDO UY, respondents.
DECISION
PANGANIBAN, J.:
The parties in this case are owners of adjoining lots in Paraaque, Metro Manila. It was discovered
in a survey that a portion of a building of petitioner, which was presumably constructed by its
predecessor-in-interest, encroached on a portion of the lot owned by private respondent. What are the
rights and obligations of the parties? Is petitioner considered a builder in bad faith because, as held by
respondent Court, he is presumed to know the metes and bounds of his property as described in his
certificate of title? Does petitioner succeed into the good faith or bad faith of his predecessor-in-interest
which presumably constructed the building?
These are the questions raised in the petition for review of the Decision[1] dated August 28, 1992,
in CA-G.R. CV No. 28293 of respondent Court[2] where the disposition reads:[3]
WHEREFORE, premises considered, the Decision of the Regional Trial Court is hereby reversed and set
aside and another one entered -
1. Dismissing the complaint for lack of cause of action;
2. Ordering Tecnogas to pay the sum of P2,000.00 per month as reasonable rental from October 4, 1979
until appellee vacates the land;
3. To remove the structures and surrounding walls on the encroached area;
4. Ordering appellee to pay the value of the land occupied by the two-storey building;
5. Ordering appellee to pay the sum of P20,000.00 for and as attorneys fees;
6. Costs against appellee.
Acting on the motions for reconsideration of both petitioner and private respondent, respondent
Court ordered the deletion of paragraph 4 of the dispositive portion in an Amended Decision dated
February 9, 1993, as follows:[4]
WHEREFORE, premises considered, our decision of August 28, 1992 is hereby modified deleting
paragraph 4 of the dispositive portion of our decision which reads:
4. Ordering appellee to pay the value of the land occupied by the two-storey building.
The motion for reconsideration of appellee is hereby DENIED for lack of merit.
The foregoing Amended Decision is also challenged in the instant petition.
The Facts
The facts are not disputed. Respondent Court merely reproduced the factual findings of the trial
court, as follows:[5]
That plaintiff (herein petitioner) which is a corporation duly organized and existing under and by virtue of
Philippine laws is the registered owner of a parcel of land situated in Barrio San Dionisio, Paraaque,
Metro Manila known as Lot 4331-A (should be 4531-A) of Lot 4531 of the Cadastral Survey of Paraaque,
Metro Manila, covered by Transfer Certificate of Title No. 409316 of the Registry of Deeds of the
Province of Rizal; that said land was purchased by plaintiff from Pariz Industries, Inc. in 1970, together
with all the buildings and improvements including the wall existing thereon; that the defendant (herein
private respondent) is the registered owner of a parcel of land known as Lot No. 4531-B of Lot 4531 of
the Cadastral Survey of Paraaque, LRC (GLRO) Rec. No. 19645 covered by Transfer Certificate of Title No.
279838, of the Registry of Deeds for the Province of Rizal; that said land which adjoins plaintiffs land was
purchased by defendant from a certain Enrile Antonio also in 1970; that in 1971, defendant purchased
another lot also adjoining plaintiffs land from a certain Miguel Rodriguez and the same was registered in
defendants name under Transfer Certificate of Title No. 31390, of the Registry of Deeds for the Province
of Rizal; that portions of the buildings and wall bought by plaintiff together with the land from Pariz
Industries are occupying a portion of defendants adjoining land; that upon learning of the encroachment
or occupation by its buildings and wall of a portion of defendants land, plaintiff offered to buy from
defendant that particular portion of defendants land occupied by portions of its buildings and wall with
an area of 770 square meters, more or less, but defendant, however, refused the offer. In 1973, the
parties entered into a private agreement before a certain Col. Rosales in Malacaang, wherein plaintiff
agreed to demolish the wall at the back portion of its land thus giving to defendant possession of a
portion of his land previously enclosed by plaintiffs wall; that defendant later filed a complaint before
the office of Municipal Engineer of Paraaque, Metro Manila as well as before the Office of the Provincial
Fiscal of Rizal against plaintiff in connection with the encroachment or occupation by plaintiffs buildings
and walls of a portion of its land but said complaint did not prosper; that defendant dug or caused to be
dug a canal along plaintiffs wall, a portion of which collapsed in June, 1980, and led to the filing by
plaintiff of the supplemental complaint in the above-entitled case and a separate criminal complaint for
malicious mischief against defendant and his wife which ultimately resulted into the conviction in court
of defendants wife for the crime of malicious mischief; that while trial of the case was in progress,
plaintiff filed in Court a formal proposal for settlement of the case but said proposal, however, was
ignored by defendant.
After trial on the merits, the Regional Trial Court[6] of Pasay City, Branch 117, in Civil Case No. PQ-
7631-P, rendered a decision dated December 4, 1989 in favor of petitioner who was the plaintiff
therein. The dispositive portion reads:[7]
WHEREFORE, judgment is hereby rendered in favor of plaintiff and against defendant and ordering the
latter to sell to plaintiff that portion of land owned by him and occupied by portions of plaintiffs
buildings and wall at the price of P2,000.00 per square meter and to pay the former:
1. The sum of P44,000.00 to compensate for the losses in materials and properties incurred by plaintiff
through thievery as a result of the destruction of its wall;
2. The sum of P7,500.00 as and by way of attorneys fees; and
3. The costs of this suit.
Appeal was duly interposed with respondent Court, which as previously stated, reversed and set
aside the decision of the Regional Trial Court and rendered the assailed Decision and Amended
Decision. Hence, this recourse under Rule 45 of the Rules of Court.
The Issues
The petition raises the following issues:[8]
(A)
Whether or not the respondent Court of Appeals erred in holding the petitioner a builder in bad
faith because it is presumed to know the metes and bounds of his property.
(B)
Whether or not the respondent Court of Appeals erred when it used the amicable settlement
between the petitioner and the private respondent, where both parties agreed to the demolition
of the rear portion of the fence, as estoppel amounting to recognition by petitioner of
respondents right over his property including the portions of the land where the other structures
and the building stand, which were not included in the settlement.
(C)
Whether or not the respondent Court of Appeals erred in ordering the removal of the structures and
surrounding walls on the encroached area and in withdrawing its earlier ruling in its August 28, 1992
decision for the petitioner to pay for the value of the land occupied by the building, only because the
private respondent has manifested its choice to demolish it despite the absence of compulsory sale
where the builder fails to pay for the land, and which choice private respondent deliberately deleted
from its September 1, 1980 answer to the supple-mental complaint in the Regional Trial Court.
In its Memorandum, petitioner poses the following issues:
A 2. Assuming that the doctrine in the alleged Co Tao vs. Chico case is contradictory to the doctrine
The time when to determine the good faith of the builder under Article 448 of the New Civil Code, is
reckoned during the period when it was actually being built; and in a case where no evidence was
presented nor introduced as to the good faith or bad faith of the builder at that time, as in this case, he
must be presumed to be a builder in good faith, since bad faith cannot be presumed.[9]
B.
In a specific boundary overlap situation which involves a builder in good faith, as in this case, it is now
well settled that the lot owner, who builds on the adjacent lot is not charged with constructive notice of
the technical metes and bounds contained in their torrens titles to determine the exact and precise
extent of his boundary perimeter.[10]
C.
The respondent courts citation of the twin cases of Tuason & Co. v. Lumanlan and Tuason & Co. v.
Macalindong is not the judicial authority for a boundary dispute situation between adjacent torrens
titled lot owners, as the facts of the present case do not fall within nor square with the involved principle
of a dissimilar case.[11]
D.
Quite contrary to respondent Uys reasoning, petitioner Tecnogas continues to be a builder in good faith,
even if it subsequently built/repaired the walls/other permanent structures thereon while the case a
quowas pending and even while respondent sent the petitioner many letters/filed cases thereon.[12]
D. (E.)
The amicable settlement between the parties should be interpreted as a contract and enforced only in
accordance with its explicit terms, and not over and beyond that agreed upon; because the courts
do nothave the power to create a contract nor expand its scope.[13]
E. (F.)
As a general rule, although the landowner has the option to choose between: (1) buying the building
built in good faith, or (2) selling the portion of his land on which stands the building under Article 448 of
the Civil Code; the first option is not absolute, because an exception thereto, once it would be
impractical for the landowner to choose to exercise the first alternative, i.e. buy that portion of the
house standing on his land, for the whole building might be rendered useless. The workable solution is
for him to select the second alternative, namely, to sell to the builder that part of his land on which was
constructed a portion of the house.[14]
Private respondent, on the other hand, argues that the petition is suffering from the following
flaws:[15]
1. It did not give the exact citations of cases decided by the Honorable Supreme Court that
allegedly contradicts the ruling of the Hon. Court of Appeals based on the doctrine laid down
in Tuason vs. Lumanlan case citing also Tuason vs. Macalindong case (Supra).
in Tuason vs. Lumanlan and Tuason vs. Macalindong, the two cases being more current, the
same should prevail.
Further, private respondent contends that the following unmistakably point to the bad faith of
petitioner: (1) private respondents purchase of the two lots, was ahead of the purchase by petitioner of
the building and lot from Pariz Industries; (2) the declaration of the General Manager of Tecnogas that
the sale between petitioner and Pariz Industries was not registered because of some problems with
China Banking Corporation; and (3) the Deed of Sale in favor of petitioner was registered in its name only
in the month of May 1973.[16]
The Courts Ruling
The petition should be granted.
Good Faith or Bad Faith
Respondent Court, citing the cases of J. M. Tuason & Co., Inc. vs. Vda. de Lumanlan[17] and J. M.
Tuason & Co., Inc. vs. Macalindong,[18] ruled that petitioner cannot be considered in good faith because
as a land owner, it is presumed to know the metes and bounds of his own property, specially if the same
are reflected in a properly issued certificate of title. One who erroneously builds on the adjoining lot
should be considered a builder in (b)ad (f)aith, there being presumptive knowledge of the Torrens title,
the area, and the extent of the boundaries.[19]
We disagree with respondent Court. The two cases it relied upon do not support its main
pronouncement that a registered owner of land has presumptive knowledge of the metes and bounds of
its own land, and is therefore in bad faith if he mistakenly builds on an adjoining land. Aside from the fact
that those cases had factual moorings radically different from those obtaining here, there is nothing in
those cases which would suggest, however remotely, that bad faith is imputable to a registered owner of
land when a part of his building encroaches upon a neighbors land, simply because he is supposedly
presumed to know the boundaries of his land as described in his certificate of title. No such doctrinal
statement could have been made in those cases because such issue was not before the Supreme
Court. Quite the contrary, we have rejected such a theory in Co Tao vs. Chico,[20] where we held that
unless one is versed in the science of surveying, no one can determine the precise extent or location of
his property by merely examining his paper title.
There is no question that when petitioner purchased the land from Pariz Industries, the buildings
and other structures were already in existence. The record is not clear as to who actually built those
structures, but it may well be assumed that petitioners predecessor-in-interest, Pariz Industries, did
so. Article 527 of the Civil Code presumes good faith, and since no proof exists to show that the
encroachment over a narrow, needle-shaped portion of private respondents land was done in bad faith
by the builder of the encroaching structures, the latter should be presumed to have built them in good
faith.[21] It is presumed that possession continues to be enjoyed in the same character in which it was
acquired, until the contrary is proved.[22] Good faith consists in the belief of the builder that the land he is
building on is his, and his ignorance of any defect or flaw in his title.[23] Hence, such good faith, by law,
passed on to Parizs successor, petitioner in this case. Further, (w)here one derives title to property from
another, the act, declaration, or omission of the latter, while holding the title, in relation to the property,
is evidence against the former.[24] And possession acquired in good faith does not lose this character
except in case and from the moment facts exist which show that the possessor is not unaware that he
possesses the thing improperly or wrongfully.[25] The good faith ceases from the moment defects in the
title are made known to the possessor, by extraneous evidence or by suit for recovery of the property by
the true owner.[26]
Recall that the encroachment in the present case was caused by a very slight deviation of the
erected wall (as fence) which was supposed to run in a straight line from point 9 to point 1 of petitioners
lot. It was an error which, in the context of the attendant facts, was consistent with good
faith. Consequently, the builder, if sued by the aggrieved landowner for recovery of possession, could
have invoked the provisions of Art. 448 of the Civil Code, which reads:
The owner of the land on which anything has been built, sown or planted in good faith, shall have the
right to appropriate as his own the works, sowing or planting, after payment of the indemnity provided
for in articles 546 and 548, or to oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy the land if its
value is considerably more than that of the building or trees. In such case, he shall pay reasonable rent, if
the owner of the land does not choose to appropriate the building or trees after proper indemnity. The
parties shall agree upon the terms of the lease and in case of disagreement, the court shall fix the terms
thereof.
The obvious benefit to the builder under this article is that, instead of being outrightly ejected from the
land, he can compel the landowner to make a choice between the two options: (1) to appropriate the
building by paying the indemnity required by law, or (2) sell the land to the builder. The landowner
cannot refuse to exercise either option and compel instead the owner of the building to remove it from
the land.[27]
The question, however, is whether the same benefit can be invoked by petitioner who, as earlier
stated, is not the builder of the offending structures but possesses them as buyer.
We answer such question in the affirmative.
In the first place, there is no sufficient showing that petitioner was aware of the encroachment at
the time it acquired the property from Pariz Industries. We agree with the trial court that various factors
in evidence adequately show petitioners lack of awareness thereof. In any case, contrary proof has not
overthrown the presumption of good faith under Article 527 of the Civil Code, as already stated, taken
together with the disputable presumptions of the law on evidence. These presumptions state, under
Section 3 (a) of Rule 131 of the Rules of Court, that the person is innocent of a crime or wrong; and
under Section 3 (ff) of Rule 131, that the law has been obeyed. In fact, private respondent Eduardo Uy
himself was unaware of such intrusion into his property until after 1971 when he hired a surveyor,
following his purchase of another adjoining lot, to survey all his newly acquired lots. Upon being apprised
of the encroachment, petitioner immediately offered to buy the area occupied by its building -- a species
of conduct consistent with good faith.
In the second place, upon delivery of the property by Pariz Industries, as seller, to the petitioner,
as buyer, the latter acquired ownership of the property. Consequently and as earlier discussed,
petitioner is deemed to have stepped into the shoes of the seller in regard to all rights of ownership over
the immovable sold, including the right to compel the private respondent to exercise either of the two
options provided under Article 448 of the Civil Code.
Estoppel
Respondent Court ruled that the amicable settlement entered into between petitioner and private
respondent estops the former from questioning the private respondents right over the disputed
property. It held that by undertaking to demolish the fence under said settlement, petitioner recognized
private respondents right over the property, and cannot later on compel private respondent to sell to it
the land since private respondent is under no obligation to sell.[28]
We do not agree. Petitioner cannot be held in estoppel for entering into the amicable settlement,
the pertinent portions of which read:[29]
That the parties hereto have agreed that the rear portion of the fence that separates the property of the
complainant and respondent shall be demolished up to the back of the building housing the machineries
which demolision (sic) shall be undertaken by the complainant at anytime.
That the fence which serve(s) as a wall housing the electroplating machineries shall not be demolished in
the mean time which portion shall be subject to negotiation by herein parties.
From the foregoing, it is clear that petitioner agreed only to the demolition of a portion of the wall
separating the adjoining properties of the parties -- i.e. up to the back of the building housing the
machineries. But that portion of the fence which served as the wall housing the electroplating
machineries was not to be demolished. Rather, it was to be subject to negotiation by herein parties. The
settlement may have recognized the ownership of private respondent but such admission cannot be
equated with bad faith. Petitioner was only trying to avoid a litigation, one reason for entering into an
amicable settlement.
As was ruled in Osmea vs. Commission on Audit,[30]
A compromise is a bilateral act or transaction that is expressly acknowledged as a juridical agreement by
the Civil Code and is therein dealt with in some detail. `A compromise, declares Article 2208 of said Code,
`is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to
one already commenced.
xxx xxx xxx
The Civil Code not only defines and authorizes compromises, it in fact encourages them in civil
actions. Art. 2029 states that `The Court shall endeavor to persuade the litigants in a civil case to agree
upon some fair compromise. x x x.
In the context of the established facts, we hold that petitioner did not lose its rights under Article
448 of the Civil Code on the basis merely of the fact that some years after acquiring the property in good
faith, it learned about -- and aptly recognized -- the right of private respondent to a portion of the land
occupied by its building. The supervening awareness of the encroachment by petitioner does not militate
against its right to claim the status of a builder in good faith. In fact, a judicious reading of said Article
448 will readily show that the landowners exercise of his option can only take place after the builder
shall have come to know of the intrusion -- in short, when both parties shall have become aware of
it. Only then will the occasion for exercising the option arise, for it is only then that both parties will have
been aware that a problem exists in regard to their property rights.
Options of Private Respondent
What then is the applicable provision in this case which private respondent may invoke as his
remedy: Article 448 or Article 450[31] of the Civil Code?
In view of the good faith of both petitioner and private respondent, their rights and obligations
are to be governed by Art. 448. The essential fairness of this codal provision has been pointed out by
Mme. Justice Ameurfina Melencio-Herrera, citing Manresa and applicable precedents, in the case of
Depra vs. Dumlao,[32] to wit:
Where the builder, planter or sower has acted in good faith, a conflict of rights arises between the
owners, and it becomes necessary to protect the owner of the improvements without causing injustice
to the owner of the land. In view of the impracticality of creating a state of forced co-ownership, the law
has provided a just solution by giving the owner of the land the option to acquire the improvements
after payment of the proper indemnity, or to oblige the builder or planter to pay for the land and the
sower to pay the proper rent. It is the owner of the land who is authorized to exercise the option,
because his right is older, and because, by the principle of accession, he is entitled to the ownership of
the accessory thing. (3 Manresa 213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co Tao vs. Chan Chico, G.
R. No. 49167, April 30, 1949; Article applied; see Cabral, et al. vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori
vs. Velasco, [C.A.] 52 Off. Gaz. 2050).
The private respondents insistence on the removal of the encroaching structures as the proper
remedy, which respondent Court sustained in its assailed Decisions, is thus legally flawed. This is not one
of the remedies bestowed upon him by law. It would be available only if and when he chooses to compel
the petitioner to buy the land at a reasonable price but the latter fails to pay such price.[33] This has not
taken place. Hence, his options are limited to: (1) appropriating the encroaching portion of petitioners
building after payment of proper indemnity, or (2) obliging the latter to buy the lot occupied by the
structure. He cannot exercise a remedy of his own liking.
Neither is petitioners prayer that private respondent be ordered to sell the land[34] the proper
remedy. While that was dubbed as the more workable solution in Grana and Torralba vs. The Court of
Appeals, et al.,[35] it was not the relief granted in that case as the landowners were directed to exercise
within 30 days from this decision their option to either buy the portion of the petitioners house on their
land or sell to said petitioners the portion of their land on which it stands.[36] Moreover, in Grana and
Torralba, the area involved was only 87 square meters while this case involves 520 square meters[37]. In
line with the case of Depra vs. Dumlao,[38] this case will have to be remanded to the trial court for further
proceedings to fully implement the mandate of Art. 448. It is a rule of procedure for the Supreme Court
to strive to settle the entire controversy in a single proceeding leaving no root or branch to bear the
seeds of future litigation.[39]
Petitioner, however, must also pay the rent for the property occupied by its building as prescribed
by respondent Court from October 4, 1979, but only up to the date private respondent serves notice of
its option upon petitioner and the trial court; that is, if such option is for private respondent to
appropriate the encroaching structure. In such event, petitioner would have a right of retention which
negates the obligation to pay rent.[40] The rent should however continue if the option chosen is
compulsory sale, but only up to the actual transfer of ownership.
The award of attorneys fees by respondent Court against petitioner is unwarranted since the
action appears to have been filed in good faith. Besides, there should be no penalty on the right to
litigate.[41]
WHEREFORE, premises considered, the petition is hereby GRANTED and the assailed Decision and
the Amended Decision are REVERSED and SET ASIDE. In accordance with the case of Depra vs.
Dumlao,[42] this case is REMANDED to the Regional Trial Court of Pasay City, Branch 117, for further
proceedings consistent with Articles 448 and 546 [43] of the Civil Code, as follows:
The trial court shall determine:
a) the present fair price of private respondents 520 square-meter area of land;
b) the increase in value (plus value) which the said area of 520 square meters may have
acquired by reason of the existence of the portion of the building on the area;
c) the fair market value of the encroaching portion of the building; and
 d) whether the value of said area of land is considerably more than the fair market value of SO ORDERED.
the portion of the building thereon.

2. After said amounts shall have been determined by competent evidence, the regional trial court shall
render judgment as follows:

a) The private respondent shall be granted a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to appropriate the
portion of the building as his own by paying to petitioner its fair market value, or to
oblige petitioner to pay the price of said area. The amounts to be respectively paid by
petitioner and private respondent, in accordance with the option thus exercised by
written notice of the other party and to the court, shall be paid by the obligor within
fifteen (15) days from such notice of the option by tendering the amount to the trial
court in favor of the party entitled to receive it;

b) If private respondent exercises the option to oblige petitioner to pay the price of the land
but the latter rejects such purchase because, as found by the trial court, the value of
the land is considerably more than that of the portion of the building, petitioner shall
give written notice of such rejection to private respondent and to the trial court within
fifteen (15) days from notice of private respondents option to sell the land. In that
event, the parties shall be given a period of fifteen (15) days from such notice of
rejection within which to agree upon the terms of the lease, and give the trial court
formal written notice of the agreement and its provisos. If no agreement is reached by
the parties, the trial court, within fifteen (15) days from and after the termination of
the said period fixed for negotiation, shall then fix the terms of the lease provided that
the monthly rental to be fixed by the Court shall not be less than two thousand pesos
(P2,000.00) per month, payable within the first five (5) days of each calendar
month. The period for the forced lease shall not be more than two (2) years, counted
from the finality of the judgment, considering the long period of time since 1970 that
petitioner has occupied the subject area. The rental thus fixed shall be increased by ten
percent (10%) for the second year of the forced lease. Petitioner shall not make any
further constructions or improvements on the building. Upon expiration of the two-
year period, or upon default by petitioner in the payment of rentals for two (2)
consecutive months, private respondent shall be entitled to terminate the forced lease,
to recover his land, and to have the portion of the building removed by petitioner or at
latters expense. The rentals herein provided shall be tendered by petitioner to the trial
court for payment to private respondent, and such tender shall constitute evidence of
whether or not compliance was made within the period fixed by the said court.

c) In any event, petitioner shall pay private respondent an amount computed at two
thousand pesos (P2,000.00) per month as reasonable compensation for the occupancy
of private respondents land for the period counted from October 4, 1979, up to the
date private respondent serves notice of its option to appropriate the encroaching
structures, otherwise up to the actual transfer of ownership to petitioner or, in case a
forced lease has to be imposed, up to the commencement date of the forced lease
referred to in the preceding paragraph;

d) The periods to be fixed by the trial court in its decision shall be non-extendible, and upon
failure of the party obliged to tender to the trial court the amount due to the obligee,
the party entitled to such payment shall be entitled to an order of execution for the
enforcement of payment of the amount due and for compliance with such other acts
as may be required by the prestation due the obligee.

No costs.
G.R. No. L-57288 April 30, 1984
LEONILA SARMINETO, petitioner,
vs.
HON. ENRIQUE A. AGANA, District Judge, Court of First Instance of Rizal, Seventh Judicial District,
Branch XXVIII, Pasay City, and SPOUSES ERNESTO VALENTINO and REBECCA LORENZO-
VALENTINO, respondents.
Mercedes M. Respicio for petitioner.
Romulo R. Bobadilla for private respondents.
MELENCIO-HERRERA, J.:ñé+.£ªwph!1
This Petition for certiorari questions a March 29, 1979 Decision rendered by the then Court of First
Instance of Pasay City. The Decision was one made on memoranda, pursuant to the provisions of RA
6031, and it modified, on October 17, 1977, a judgment of the then Municipal Court of Paranaque, Rizal,
in an Ejectment suit instituted by herein petitioner Leonila SARMIENTO against private respondents, the
spouses ERNESTO Valentino and Rebecca Lorenzo. For the facts, therefore, we have to look to the
evidence presented by the parties at the original level.
It appears that while ERNESTO was still courting his wife, the latter's mother had told him the couple
could build a RESIDENTIAL HOUSE on a lot of 145 sq. ms., being Lot D of a subdivision in Paranaque (the
LAND, for short). In 1967, ERNESTO did construct a RESIDENTIAL HOUSE on the LAND at a cost of
P8,000.00 to P10,000.00. It was probably assumed that the wife's mother was the owner of the LAND
and that, eventually, it would somehow be transferred to the spouses.
It subsequently turned out that the LAND had been titled in the name of Mr. & Mrs. Jose C. Santo, Jr.
who, on September 7 , 1974, sold the same to petitioner SARMIENTO. The following January 6, 1975,
SARMIENTO asked ERNESTO and wife to vacate and, on April 21, 1975, filed an Ejectment suit against
them. In the evidentiary hearings before the Municipal Court, SARMIENTO submitted the deed of sale of
the LAND in her favor, which showed the price to be P15,000.00. On the other hand, ERNESTO testified
that the then cost of the RESIDENTIAL HOUSE would be from P30,000.00 to P40,000.00. The figures were
not questioned by SARMIENTO.
The Municipal Court found that private respondents had built the RESIDENTIAL HOUSE in good faith,
and, disregarding the testimony of ERNESTO, that it had a value of P20,000.00. It then ordered ERNESTO
and wife to vacate the LAND after SARMIENTO has paid them the mentioned sum of P20,000.00.
The Ejectment suit was elevated to the Court of First Instance of Pasay where, after the submission of
memoranda, said Court rendered a modifying Decision under Article 448 of the Civil Code. SARMIENTO
was required, within 60 days, to exercise the option to reimburse ERNESTO and wife the sum of
40,000.00 as the value of the RESIDENTIAL HOUSE, or the option to allow them to purchase the LAND for
P25,000.00. SARMIENTO did not exercise any of the two options within the indicated period, and
ERNESTO was then allowed to deposit the sum of P25,000.00 with the Court as the purchase price for
the LAND. This is the hub of the controversy. SARMIENTO then instituted the instant certiorari
proceedings.
We agree that ERNESTO and wife were builders in good faith in view of the peculiar circumstances under
which they had constructed the RESIDENTIAL HOUSE. As far as they knew, the LAND was owned by
ERNESTO's mother-in-law who, having stated they could build on the property, could reasonably be
expected to later on give them the LAND.
In regards to builders in good faith, Article 448 of the Code provides:têñ.£îhqwâ£
ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith,
shall have the right
to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land, and the one
who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof.
(Paragraphing supplied)
The value of the LAND, purchased for P15,000.00 on September 7, 1974, could not have been very much
more than that amount during the following January when ERNESTO and wife were asked to vacate.
However, ERNESTO and wife have not questioned the P25,000.00 valuation determined by the Court of
First Instance.
In regards to the valuation of the RESIDENTIAL HOUSE, the only evidence presented was the testimony
of ERNESTO that its worth at the time of the trial should be from P30,000.00 to P40,000.00. The
Municipal Court chose to assess its value at P20,000.00, or below the minimum testified by ERNESTO,
while the Court of First Instance chose the maximum of P40,000.00. In the latter case, it cannot be said
that the Court of First Instance had abused its discretion.
The challenged decision of respondent Court, based on valuations of P25,000.00 for the LAND and
P40,000.00 for the RESIDENTIAL HOUSE, cannot be viewed as not supported by the evidence. The
provision for the exercise by petitioner SARMIENTO of either the option to indemnify private
respondents in the amount of P40,000.00, or the option to allow private respondents to purchase the
LAND at P25,000.00, in our opinion, was a correct decision.têñ.£îhqwâ£
The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his
building, under article 453 (now Article 546). The owner, of the land. upon, the
other hand, has the option, under article 361 (now Article 448), either to pay for
the building or to sell his land to the owner of the building. But he cannot, as
respondents here did, refuse both to pay for the building and to sell the land and
compel the owner of the building to remove it from the land where it is erected.
 He is entitled to such remotion only when, after having chosen to sell his land, the
other party fails to pay for the same. (Emphasis ours)

We hold, therefore, that the order of Judge Natividad compelling defendants-

petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor to
sell the land, is null and void, for it amends substantially the judgment sought to
be executed and is, furthermore, offensive to articles 361 (now Article 448) and
453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605, 608
[1946]).

WHEREFORE, the Petition for Certiorari is hereby ordered dismissed, without pronouncement as to
costs.

SO ORDERED.1äwphï1.ñët
 [G.R. Nos. 154391-92. September 30, 2004]
Spouses ISMAEL and TERESITA MACASAET, petitioners, vs. Spouses VICENTE and ROSARIO
MACASAET, respondents.
DECISION
PANGANIBAN, J.:
The present case involves a dispute between parents and children. The children were invited by
the parents to occupy the latters two lots, out of parental love and a desire to foster family
solidarity. Unfortunately, an unresolved conflict terminated this situation. Out of pique, the parents
asked them to vacate the premises. Thus, the children lost their right to remain on the property. They
have the right, however, to be indemnified for the useful improvements that they constructed thereon in
good faith and with the consent of the parents. In short, Article 448 of the Civil Code applies.
The Case
Before us is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the March 22,
2002 Decision[2] and the June 26, 2002 Resolution[3] of the Court of Appeals (CA) in CA-GR SP Nos. 56205
& 56467. The challenged Decision disposed as follows:
WHEREFORE, the assailed Decision is AFFIRMED with the following MODIFICATIONS:
1. Vicente and Rosario should reimburse Ismael and Teresita one-half of the value of the
useful improvements introduced in the premises prior to demand, which is equivalent
to P475,000.00. In case the former refuse to reimburse the said amount, the latter may
remove the improvements, even though the land may suffer damage thereby. They shall
not, however, cause any more impairment upon the property leased than is necessary.
2. The award of attorneys fees is DELETED.
3. The records of these consolidated cases are REMANDED to the Court of origin for
further proceedings to determine the option to be taken by Vicente and Rosario and to
implement the same with dispatch.[4]
The assailed Resolution denied petitioners Motion for Reconsideration.
The Facts
Petitioners Ismael and Teresita[5] Macasaet and Respondents Vicente and Rosario Macasaet are
first-degree relatives. Ismael is the son of respondents, and Teresita is his wife.[6]
On December 10, 1997, the parents filed with the Municipal Trial Court in Cities (MTCC)
of Lipa City an ejectment suit against the children.[7] Respondents alleged that they were the owners of
two (2) parcels of land covered by Transfer Certificate of Title (TCT) Nos. T-78521 and T-103141, situated
at Banay-banay, Lipa City; that by way of a verbal lease agreement, Ismael and Teresita occupied these
lots in March 1992 and used them as their residence and the situs of their construction business; and
that despite repeated demands, petitioners failed to pay the agreed rental of P500 per week.[8]
Ismael and Teresita denied the existence of any verbal lease agreement. They claimed that
respondents had invited them to construct their residence and business on the subject lots in order that
they could all live near one other, employ Marivic (the sister of Ismael), and help in resolving the
problems of the family.[9] They added that it was the policy of respondents to allot the land they owned
as an advance grant of inheritance in favor of their children. Thus, they contended that the lot covered
by TCT No. T-103141 had been allotted to Ismael as advance inheritance. On the other hand, the lot
covered by TCT No. T-78521 was allegedly given to petitioners as payment for construction materials
used in the renovation of respondents house.[10]
The MTCC[11] ruled in favor of respondents and ordered petitioners to vacate the premises. It
opined that Ismael and Teresita had occupied the lots, not by virtue of a verbal lease agreement, but by
tolerance of Vicente and Rosario.[12] As their stay was by mere tolerance, petitioners were necessarily
bound by an implied promise to vacate the lots upon demand.[13]The MTCC dismissed their contention
that one lot had been allotted as an advance inheritance, on the ground that successional rights were
inchoate. Moreover, it disbelieved petitioners allegation that the other parcel had been given as
payment for construction materials.[14]
On appeal, the regional trial court[15] (RTC) upheld the findings of the MTCC. However, the RTC
allowed respondents to appropriate the building and other improvements introduced by petitioners,
after payment of the indemnity provided for by Article 448 in relation to Articles 546 and 548 of the Civil
Code.[16] It added that respondents could oblige petitioners to purchase the land, unless its value was
considerably more than the building. In the latter situation, petitioners should pay rent if respondents
would not choose to appropriate the building.[17]
Upon denial of their individual Motions for Reconsideration, the parties filed with the CA separate
Petitions for Review, which were later consolidated.[18]
Ruling of the Court of Appeals
The CA sustained the finding of the two lower courts that Ismael and Teresita had been occupying
the subject lots only by the tolerance of Vicente and Rosario.[19] Thus, possession of the subject lots by
petitioners became illegal upon their receipt of respondents letter to vacate it.[20]
Citing Calubayan v. Pascual,[21] the CA further ruled that petitioners status was analogous to that
of a lessee or a tenant whose term of lease had expired, but whose occupancy continued by tolerance of
the owner.[22] Consequently, in ascertaining the right of petitioners to be reimbursed for the
improvements they had introduced on respondents properties,[23] the appellate court applied the Civil
Codes provisions on lease. The CA modified the RTC Decision by declaring that Article 448 of the Civil
Code was inapplicable. The CA opined that under Article 1678 of the same Code, Ismael and Teresita had
the right to be reimbursed for one half of the value of the improvements made.[24]
Not satisfied with the CAs ruling, petitioners brought this recourse to this Court.[25]
The Issues
 Petitioners raise the following issues for our consideration:
1. a) Whether or not Section 17[,] Rule 70 of the Rules of Court on Judgment should apply in the
rendition of the decision in this case;
b) Whether or not the Complaint should have been dismissed;
c) Whether or not damages including attorneys fees should have been awarded to herein
petitioners;
2. a) Whether or not the rule on appearance of parties during the Pretrial should apply on appearance of
parties during Preliminary Conference in an unlawful detainer suit;
b) Whether or not the case of Philippine Pryce Assurance Corporation vs. Court of
Appeals (230 SCRA 164) is applicable to appearance of parties in an unlawful detainer suit;
3. Whether or not Article 1678 of the Civil Code should apply to the case on the matters of
improvements, or is it Article 447 of the Civil Code in relation to the Article 453 and 454 thereof that
should apply, if ever to apply the Civil Code;
4. Whether or not the [D]ecision of the Court of Appeals is supported by evidence, appropriate laws,
rules and jurisprudence;
5. Whether or not Assisting Judge Norberto Mercado of the MTCC Lipa City should be held accountable
in rendering the MTCC [D]ecision;
6. Whether or not Atty. Glenn Mendoza and Atty. Andrew Linatoc of the same [l]aw office should be held
accountable for pursuing the [e]jectment case[.][26]
The Courts Ruling
The Petition is partly meritorious.
First Issue:
Ejectment
Who is entitled to the physical or material possession of the premises? At the outset, we stress
that this is the main issue in ejectment proceedings.[27] In the present case, petitioners failed to justify
their right to retain possession of the subject lots, which respondents own. Since possession is one of the
attributes of ownership,[28] respondents clearly are entitled to physical or material possession.
Allegations of the Complaint
Petitioners allege that they cannot be ejected from the lots, because respondents based their
Complaint regarding the nonpayment of rentals on a verbal lease agreement, which the latter failed to
prove.[29] Petitioners contend that the lower courts erred in using another ground (tolerance of
possession) to eject them.
In actions for unlawful detainer, possession that was originally lawful becomes unlawful upon the
expiration or termination of the defendants right to possess, arising from an express or implied
contract.[30] In other words, the plaintiffs cause of action comes from the expiration or termination of the
defendants right to continue possession.[31] The case resulting therefrom must be filed within one year
from the date of the last demand.
To show a cause of action in an unlawful detainer, an allegation that the defendant is illegally
withholding possession from the plaintiff is sufficient. The complaint may lie even if it does not employ
the terminology of the law, provided the said pleading is couched in a language adequately stating that
the withholding of possession or the refusal to vacate has become unlawful.[32] It is equally settled that
the jurisdiction of the court, as well as the nature of the action, is determined from the averments of the
complaint.[33]
In the present case, the Complaint alleged that despite demands, petitioners refused to pay the
accrued rentals and [to] vacate the leased premises.[34] It prayed that judgment be rendered [o]rdering
[petitioners] and all those claiming rights under them to vacate the properties x x x and remove the
structures x x x constructed thereon.[35] Effectively then, respondents averred that petitioners original
lawful occupation of the subject lots had become unlawful.
The MTCC found sufficient cause to eject petitioners. While it disbelieved the existence of a verbal
lease agreement, it nevertheless concluded that petitioners occupation of the subject lots was by mere
tolerance of respondents. Basing its conclusion on the fact that the parties were close relatives, the
MTCC ruled thus:
x x x [T]he parties herein are first degree relatives. Because of this relationship, this Court takes judicial
notice of the love, care, concern and protection imbued upon the parents towards their [children], i.e., in
the instant case, the love, care, concern and protection of the [respondents] to the [petitioners]. With
this in mind, this Court is inclined to believe the position of the [petitioners] that there was no such
verbal lease agreement between the parties herein that took place in 1992. x x x.
From the allegations of the [petitioners], this Court is convinced that their stay and occupancy of the
subject premises was by mere tolerance of the [respondents], and not by virtue of a verbal lease
agreement between them.[36]
Having found a cause of action for unlawful detainer, the MTCC (as well as the RTC and the CA) did
not err in ordering the ejectment of petitioners as prayed for by respondents. There was no violation of
Section 17 of Rule 70[37] of the Rules of Court. As earlier explained, unlawful detainer was sufficiently
alleged in the Complaint and duly proven during the trial.Significantly, the issue of whether there was
enough ground to eject petitioners was raised during the preliminary conference.[38]
Not Merely Tolerated
Possession
Petitioners dispute the lower courts finding that they occupied the subject lots on the basis of
mere tolerance. They argue that their occupation was not under such condition, since respondents had
invited, offered and persuaded them to use those properties.[39]
 This Court has consistently held that those who occupy the land of another at the latters tolerance
or permission, without any contract between them, are necessarily bound by an implied promise that
the occupants will vacate the property upon demand.[40] A summary action for ejectment is the proper
remedy to enforce this implied obligation.[41] The unlawful deprivation or withholding of possession is to
be counted from the date of the demand to vacate.[42]
Toleration is defined as the act or practice of permitting or enduring something not wholly
approved of.[43] Sarona v. Villegas[44] described what tolerated acts means, in this language:
Professor Arturo M. Tolentino states that acts merely tolerated are those which by reason of
neighborliness or familiarity, the owner of property allows his neighbor or another person to do on the
property; they are generally those particular services or benefits which ones property can give to
another without material injury or prejudice to the owner, who permits them out of friendship or
courtesy. x x x. And, Tolentino continues, even though this is continued for a long time, no right will be
acquired by prescription. x x x. Further expounding on the concept, Tolentino writes: There is tacit
consent of the possessor to the acts which are merely tolerated. Thus, not every case of knowledge and
silence on the part of the possessor can be considered mere tolerance. By virtue of tolerance that is
considered as an authorization, permission or license, acts of possession are realized or performed. The
question reduces itself to the existence or non-existence of the permission.[45]
We hold that the facts of the present case rule out the finding of possession by mere
tolerance. Petitioners were able to establish that respondents had invited them to occupy the subject
lots in order that they could all live near one other and help in resolving family problems.[46] By occupying
those lots, petitioners demonstrated their acceptance of the invitation.Hence, there was a meeting of
minds, and an agreement regarding possession of the lots impliedly arose between the parties.
The occupancy of the subject lots by petitioners was not merely something not wholly approved
of by respondents. Neither did it arise from what Tolentino refers to as neighborliness or familiarity. In
point of fact, their possession was upon the invitation of and with the complete approval of respondents,
who desired that their children would occupy the premises. It arose from familial love and a desire for
family solidarity, which are basic Filipino traits.
Right to Use the Lots Terminated
That Ismael and Teresita had a right to occupy the lots is therefore clear. The issue is the duration
of possession. In the absence of a stipulation on this point, Article 1197 of the Civil Code allows the
courts to fix the duration or the period.
Article 1197. If the obligation does not fix a period, but from its nature and the circumstances it can be
inferred that a period was intended, the courts may fix the duration thereof.
The courts shall also fix the duration of the period when it depends upon the will of the debtor.
In every case the courts shall determine such period as may under the circumstances have been
probably contemplated by the parties. Once fixed by the courts, the period cannot be changed by them.
Article 1197, however, applies to a situation in which the parties intended a period. Such
qualification cannot be inferred from the facts of the present case.
To repeat, when Vicente and Rosario invited their children to use the lots, they did so out of
parental love and a desire for solidarity expected from Filipino parents. No period was intended by the
parties. Their mere failure to fix the duration of their agreement does not necessarily justify or authorize
the courts to do so.[47]
Based on respondents reasons for gratuitously allowing petitioners to use the lots, it can be safely
concluded that the agreement subsisted as long as the parents and the children mutually benefited from
the arrangement. Effectively, there is a resolutory condition in such an agreement.[48] Thus, when a
change in the condition existing between the parties occurs -- like a change of ownership, necessity,
death of either party or unresolved conflict or animosity -- the agreement may be deemed
terminated. Having been based on parental love, the agreement would end upon the dissipation of the
affection.
When persistent conflict and animosity overtook the love and solidarity between the parents and
the children, the purpose of the agreement ceased.[49] Thus, petitioners no longer had any cause for
continued possession of the lots. Their right to use the properties became untenable. It ceased upon
their receipt of the notice to vacate. And because they refused to heed the demand, ejectment was the
proper remedy against them. Their possession, which was originally lawful, became unlawful when the
reason therefor -- love and solidarity -- ceased to exist between them.
No Right to Retain
Possession
Petitioners have not given this Court adequate reasons to reverse the lower courts dismissal of
their contention that Lots T-78521 and T-103141, respectively, were allegedly allotted to them as part of
their inheritance and given in consideration for past debts.
The right of petitioners to inherit from their parents is merely inchoate and is vested only upon
the latters demise. Indisputably, rights of succession are transmitted only from the moment of death of
the decedent.[50] Assuming that there was an allotment of inheritance, ownership nonetheless remained
with respondents. Moreover, an intention to confer title to certain persons in the future is not
inconsistent with the owners taking back possession in the meantime for any reason deemed
sufficient.[51] Other than their self-serving testimonies and their affidavits, petitioners offered no credible
evidence to support their outlandish claim of inheritance allocation.
We also agree with the lower courts that petitioners failed to prove the allegation that, through a
dation in payment, Lot T-78521 had been transferred to the latter as payment for respondents
debts.[52] The evidence presented by petitioners related only to the alleged indebtedness of the parents
arising from the latters purported purchases and advances.[53] There was no sufficient proof that
respondents had entered into a contract of dation to settle the alleged debt. Petitioners even stated that
there was a disagreement in the accounting of the purported debt,[54] a fact that disproves a meeting of
the minds with the parents.
Petitioners also admitted that a portion of the alleged debt is the subject matter of a collection
case against respondents (Civil Case No. 0594-96).[55] Thus, the formers allegation that the indebtedness
has been paid through a dation cannot be given credence, inconsistent as it is with their action to
recover the same debt.
Despite their protestations, petitioners recognized the right of the parents to recover the
premises when they admitted in their Position Paper filed with the MTCC that respondents had a title to
the lots.
The [respondents] want to get their property because the title is theirs, the [petitioners] do not object
but what is due the [petitioners] including the reparation for the tarnish of their dignity and honor must
be given the [petitioners] for the benefits of their children before the premises will be turned over.[56]
As a rule, the right of ownership carries with it the right of possession.
Second Issue:
Appearance at the Preliminary Conference
Section 8 of Rule 70 of the Rules of Court requires the appearance of the plaintiff and the
defendant during the preliminary conference. On the basis of this provision, petitioners claim that the
MTCC should have dismissed the case upon the failure of respondents to attend the
conference. However, petitioners do not dispute that an attorney-in-fact with a written authorization
from respondents appeared during the preliminary conference.[57] The issue then is whether the rules on
ejectment allow a representative to substitute for a partys personal appearance.
Unless inconsistent with Rule 70, the provisions of Rule 18 on pretrial applies to the preliminary
conference.[58] Under Section 4 of this Rule, the nonappearance of a party may be excused by the
showing of a valid cause; or by the appearance of a representative, who has been fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of dispute resolution, and
to enter into stipulations or admissions of facts and of documents.[59]
Section 4 of Rule 18 may supplement Section 8 of Rule 70. Thus, the spirit behind the exception to
personal appearance under the rules on pretrial is applicable to the preliminary conference. If there are
valid reasons or if a representative has a special authority, a partys appearance may be waived. As
petitioners are challenging only the applicability of the rules on pretrial to the rule on preliminary
conference, the written authorization from respondents can indeed be readily considered as a special
authorization.
Third Issue:
Rights of a Builder in Good Faith
As applied to the present case, accession refers to the right of the owner to everything that is
incorporated or attached to the property.[60] Accession industrial -- building, planting and sowing on an
immovable -- is governed by Articles 445 to 456 of the Civil Code.
Articles 447 and 1678 of the
Civil Code Inapplicable
To buttress their claim of reimbursement for the improvements introduced on the property,
petitioners cite Article 447.[61] They allege that the CA erred in applying Article 1678, since they had no
lease agreement with respondents.
We clarify. Article 447 is not applicable, because it relates to the rules that apply when the owner
of the property uses the materials of another. It does not refer to the instance when a possessor builds
on the property of another, which is the factual milieu here.
In view of the unique factual setting of the instant case, the contention of petitioners regarding
the inapplicability of Article 1678 deserves attention. The CA applied the provisions on lease, because it
found their possession by mere tolerance comparable with that of a lessee, per the pronouncement
in Calubayan v. Pascual,[62] from which we quote:
x x x. It has been held that a person who occupies the land of another at the latters tolerance or
permission, without any contract between them, is necessarily bound by an implied promise that he will
vacate upon demand, failing which a summary action for ejectment is the proper remedy against
them. The status of defendant is analogous to that of a lessee or tenant whose term of lease has expired
but whose occupancy continued by tolerance of the owner. In such a case, the unlawful deprivation or
withholding of possession is to be counted from the date of the demand to vacate.[63] (Emphasis in the
original.)
As explained earlier, Ismael and Teresitas possession of the two lots was not by mere tolerance, a
circumstance that negates the applicability of Calubayan.
Article 448 Applicable
On the other hand, when a person builds in good faith on the land of another, the applicable
provision is Article 448, which reads:[64]
Article 448. The owner of the land on which anything has been built, sown or planted in good faith, shall
have the right to appropriate as his own the works, sowing or planting, after payment of the indemnity
provided for in Articles 546 and 548, or to oblige the one who built or planted to pay the price of the
land, and the one who sowed, the proper rent. However, the builder or planter cannot be obliged to buy
the land if its value is considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the building or trees after
proper indemnity. The parties shall agree upon the terms of the lease and in case of disagreement, the
court shall fix the terms thereof.
This Court has ruled that this provision covers only cases in which the builders, sowers or planters
believe themselves to be owners of the land or, at least, to have a claim of title thereto.[65] It does not
apply when the interest is merely that of a holder, such as a mere tenant, agent or usufructuary. [66] From
these pronouncements, good faith is identified by the belief that the land is owned; or that -- by some
title -- one has the right to build, plant, or sow thereon.[67]
However, in some special cases, this Court has used Article 448 by recognizing good faith beyond
this limited definition. Thus, in Del Campo v. Abesia,[68] this provision was applied to one whose house --
despite having been built at the time he was still co-owner -- overlapped with the land of another.[69] This
article was also applied to cases wherein a builder had constructed improvements with the consent of
the owner. The Court ruled that the law deemed the builder to be in good faith.[70] In Sarmiento v.
Agana,[71] the builders were found to be in good faith despite their reliance on the consent of another,
whom they had mistakenly believed to be the owner of the land.[72]
Based on the aforecited special cases, Article 448 applies to the present factual milieu. The
established facts of this case show that respondents fully consented to the improvements introduced by
petitioners. In fact, because the children occupied the lots upon their invitation, the parents certainly
knew and approved of the construction of the improvements introduced thereon.[73] Thus, petitioners
may be deemed to have been in good faith when they built the structures on those lots.
 The instant case is factually similar to Javier v. Javier.[74] In that case, this Court deemed the son to
be in good faith for building the improvement (the house) with the knowledge and consent of his father,
to whom belonged the land upon which it was built. Thus, Article 448[75] was applied.
Rule on Useful Expenses
The structures built by petitioners were useful improvements, because they augmented the value
or income of the bare lots.[76] Thus, the indemnity to be paid by respondents under Article 448 is
provided for by Article 546, which we quote:
Given the foregoing rulings, it is no longer necessary to address petitioners allegation that the
MTCC judge and respondents lawyers should be respectively held personally accountable for the
Decision and for filing the case.[79] The insinuation of petitioners that the lawyers manipulated the
issuance of a false barangay certification is unavailing.[80] Their contention that respondents did not
attend the barangay conciliation proceedings was based solely on hearsay, which has little or no
probative value.[81]
WHEREFORE, the assailed Decision and Resolution of the Court of Appeals are AFFIRMED with the
following MODIFICATIONS:
1. The portion requiring Spouses Vicente and Rosario Macasaet to reimburse one half of the value
of the useful improvements, amounting to P475,000, and the right of Spouses Ismael and Rosita
Macasaet to remove those improvements (if the former refuses to reimburse) is DELETED.

Art. 546. Necessary expenses shall be refunded to every possessor; but only the possessor in good faith 2. The case is REMANDED to the court of origin for further proceedings to determine the facts
may retain the thing until he has been reimbursed therefor. essential to the proper application of Articles 448 and 546 of the Civil Code, specifically to the following
matters:

Useful expenses shall be refunded only to the possessor in good faith with the same right of retention,
the person who has defeated him in the possession having the option of refunding the amount of the
expenses or of paying the increase in value which the thing may have acquired by reason thereof.
Consequently, respondents have the right to appropriate -- as their own -- the building and other
improvements on the subject lots, but only after (1) refunding the expenses of petitioners or (2) paying
the increase in value acquired by the properties by reason thereof. They have the option to oblige
petitioners to pay the price of the land, unless its value is considerably more than that of the structures --
in which case, petitioners shall pay reasonable rent.
a. Spouses Vicente and Rosario Macasaets option to appropriate -- as their own -- the improvements on
the lots, after paying the indemnity, as provided under Article 546 in relation to Article 448 of the Civil
Code; or in requiring Spouses Ismael and Rosita Macasaet to pay for the value of the lots, unless it is
considerably more than that of the improvements, in which case petitioners shall pay reasonable rent
based upon the terms provided under the Civil Code
b. The value of the useful expenses incurred by Spouses Ismael and Rosita Macasaet in the construction
of the improvements on the lots

In accordance with Depra v. Dumlao,[77] this case must be remanded to the trial court to c. The increase in value acquired by the lots by reason of the useful improvements
determine matters necessary for the proper application of Article 448 in relation to Article 546.Such
matters include the option that respondents would take and the amount of indemnity that they would
pay, should they decide to appropriate the improvements on the lots. We disagree with the CAs d. Spouses Vicente and Rosario Macasaets choice of type of indemnity to be paid (whether b or c)
computation of useful expenses, which were based only on petitioners bare allegations in their
Answer.[78] e. Whether the value of the lots is considerably more than that of the improvements built thereon

No pronouncement as to costs.
Ruling on Improvement Justified SO ORDERED.

While, ordinarily, the jurisdiction of the MTCC on ejectment proceedings is limited to the issue of
physical or material possession of the property in question, this Court finds it necessary to abbreviate the
issue on the improvements in relation to Article 448. First, the determination of the parties right to those
improvements is intimately connected with the MTCC proceedings in the light of the ejectment of
petitioners. Second, there is no dispute that while they constructed the improvements, respondents
owned the land. Third, both parties raised no objection when the RTC and the CA ruled accordingly on
this matter.

Equitable considerations compel us to settle this point immediately, pro hoc vice, to avoid
needless delay. Both parties have already been heard on this issue; to dillydally or equivocate would not
serve the cause of substantial justice.

Other Issues Raised

G.R. No. L-12486 August 31, 1960
LEONOR GRANA and JULIETA TORRALBA, petitioners,
vs.
THE COURT OF APPEALS, AURORA BONGATO and JARDENIO SANCHEZ, respondents.
Tranquilino O. Calo, Jr. for petitioners.
E.D. Mercado, J.V. Ong and J.T. Gonzales for respondents.
GUTIERREZ DAVID, J.:
This is a petition to review on certiorari a decision of the Court of Appeals.
Leonor Grana and Julieta Torralba, defendants below and herein petitioners, were on April 13, 1951 sued
by Aurora Bongato and Jardenio Sanchez, respondents herein, before the Court of First Instance of
Agusan, for the recovery of 87 square meters of residential land. After trial, the court rendered judgment
declaring the plaintiffs, herein respondents, owners of the land in controversy and ordering petitioners
to vacate and deliver it to said respondents and to pay a monthly rental of P10.00 from the filing of the
complaint until they actually vacate the same, plus attorney's fees and costs. The decision, on appeal,
having been affirmed by the Court of Appeals with the only modification of disallowing the award for
attorney's fees, petitioners brought the case to this Court through the present petition for review.
The record discloses that sometime in 1909 a cadastral survey of Butuan, Agusan, was made by the
Bureau of Lands. In that survey, the parcel of land here in question was included as part of the lot
belonging to Gregorio Bongato and Clara Botcon for which Original Certificate of Title No. RO-72 (138)
was issued in their favor on February 12, 1923. On November 25, 1933, this lot was purchased by the
spouses Marcos Bongato and Eusebia More, and upon their death, the land was inherited by the
respondents Aurora Bongato and Jardenio Sanchez, the former being the daughter of Marcos Bongato by
his first marriage while the latter is the son of Eusebia More also by her first marriage.
Petitioners claim that the lands in Butuan were subsequently resurveyed due to conflicts and
overlapping of boundaries. In that resurvey (TS-65 Butuan Cadastre), Gregorio Bongato's lot, according
to petitioners, was identified as Lot No. 311 and that of Isidaria Trillo, their predecessor in interest, as Lot
No. 310. Citing the fact that Original Certificate of Title No. RO-72 (138) covers 295 square meters of
land, while the sketch plan of the second cadastral survey of Butuan shows that Lot No. 311 has only 230
square meters, petitioners maintain that it is the latter area properly belongs to respondents and that
the land in question is part of the adjoining land, Lot No. 310, which belonged to their predecessor in
interest.
Petitioners' stand is untenable. No proof was presented to show that the first survey was erroneous or
that it included part of the contigous land of petitioners' predecessor in interest as part of the lot now
covered by Original Certificate of Title No. RO-72 (138). Note that the difference in area between the
land covered by said title and Lot No. 311 of the resurvey plan is 65 square meters while the area of the
land in dispute if 87 square meters. And what is more, the alleged sketch plan of the resurvey was not
presented in evidence.
Upon the other hand, it is not disputed that the land in question is part of the lot covered by the Torrens
title issued way back in 1923 in the name of respondents' predecessor in interest. Said title has not been
contested up to the present, and, therefore, has become inconvertible evidence of the ownership of the
land covered by it. Well settled is the rule that a Torrens certificate of title becomes conclusive and
indefeasible after the lapse of the period within which it may be impugned (Reyes, et al. vs. Borbon, et
al., 50 Phil., 791; Yumul vs. Rivera, et al., 64 Phil., 13).
Petitioners' contention that the Court of Appeals erred in not granting their motion for new trial on the
ground of newly discovered evidence, likewise, cannot be sustained. The new evidence sought to be
introduced was the sketch plan of the second survey, which, with the employment of reasonable
diligence would have easily been discovered and produced at the trial. Anyway, even if presented at the
result of the case. If a subsequent certificate of title cannot be permitted to prevail over a previous
Torrens title (Reyes, et al, vs. Borbon, et al., supra) with more reason should a resurvey plan not to be
allowed to alter or modify such title so as to make the area of the land therein described agree with that
given in the plan. (See Government of the Philippines vs. Arias, 36 Phil., 195).
Although without any legal and valid claim over the land in question, petitioners, however, were found
by the Court of Appeals to have constructed a portion of their house thereon in good faith. Under Article
361 of the old Civil Code (Article 448 of the new), the owner of the land on which anything has been built
in good faith shall have the right to appropriate as his own faith shall have the right to appropriate as his
own the building, after payment to the builder of necessary and useful expenses, and in the proper case,
expenses for pure luxury or mere pleasure, or to oblige the builder to pay the price of the land.
Respondents, as owners of the land, have therefore the choice of either appropriating the portion of
petitioners' house which is on their land upon payment of the proper indemnity to petitioners, or selling
to petitioners that part of their land on which stands the improvement. It may here be pointed out that
it would be impractical for respondents to choose to exercise the first alternative, i.e., buy that portion
of the house standing on their land, for in that event the whole building might be rendered useless. The
more workable solution, it would seem, is for respondents to sell to petitioners that part of their land on
which was constructed a portion of the latter's house. If petitioners are unwilling or unable to buy, then
they must vacate the land and must pay rentals until they do so. Of course, respondents cannot oblige
petitioners to buy the land if its value is considerably more than that of the aforementioned portion of
the house. If such be the case, then petitioners must pay reasonable rent. The parties must come to an
agreement as to the conditions of the lease, and should they fail to do so, then the court shall fix the
same. (Article 361, old Civil Code; Article 448 of the new).
In this connection, the appellate court erred in ordering petitioners to pay monthly rentals of P10.00
from the date of filing of the complaint until they actually vacate said land. A builder in good faith may
not be required to pay rentals. He has a right to retain the land on which he has built in good faith until
he is reimbursed the expenses incurred by him. (Miranda vs. Fadullon, et al., 97 Phil., 801; 51 Off. Gaz.,
6226, see also Martinez vs. Baganus, 28 Phil., 500; De Guzman vs. De la Fuente, 55 Phil., 501;
Kasilag vs. Rodriguez, Off. Gaz., Supp., August 16, 1941, p. 247).
Petitioners further contend that he complaint should have been dismissed for nonjoinder of an
indispensable party, it being alleged that their mother Maria Cupin, who owns the land in question as
part of her Lot No. 310, has not been made a party defendant in the case. This contention, which was not
raised in the trial court, deserves scant consideration. Petitioners clearly asserted ownership over the
land in dispute as well as over Lot No. 310 in their answer to the complaint. They are consequently
estopped from alleging otherwise.
As to petitioners' assertion that they should have been awarded damages alleged to have been suffered
by them in their counterclaim, suffice it to say that petitioners failed to prove that they suffered any
damage at all by reason of the filing of the complaint. Indeed, in the light of the view we have taken of
the case, they could not have substantiated their claim for damages.
In view of the foregoing, the appealed decision is modified in the sense that respondents are hereby
directed to exercise within 30 days from this decision their option to either buy the portion of the
petitioners' house on their land or sell to said petitioners the portion of their land and petitioners are
unwilling or unable to buy, then they must vacate the same and must pay reasonable rent of P10.00
monthly from the time respondents made their choice up to the time they actually vacate the premises.
But if the value of the eland is considerably more than the value of the improvement, then petitioners
may elect to rent the land, in which case the parties shall agree upon the terms of a lease. Should they
disagree, the court of origin is hereby instructed to intervene and fix the terms thereof. Petitioners shall
pay reasonable rent of P10.00 monthly up to the time the parties agree on the terms of the lease or until
the curt fixes such terms.

So ordered without pronouncement as to costs.

G.R. No. L-57348 May 16, 1985
FRANCISCO DEPRA, plaintiff-appellee,
vs.
AGUSTIN DUMLAO, defendant-appellant.
Roberto D. Dineros for plaintiff-appellee.
Veil D. Hechanova for defendant-appellant.
MELENCIO-HERRERA, J.:
This is an appeal from the Order of the former Court of First Instance of Iloilo to the then Court of
Appeals, which the latter certified to this instance as involving pure questions of law
Plaintiff-appellee, Francisco Depra, is the owner of a parcel of land registered under Transfer Certificate
of Title No. T3087, known as Lot No. 685, situated in the municipality of Dumangas, Iloilo, with an area of
approximately 8,870 square meters. Agustin Dumlao, defendant-appellant, owns an adjoining lot,
designated as Lot No. 683, with an approximate area of 231 sq. ms.
Sometime in 1972, when DUMLAO constructed his house on his lot, the kitchen thereof had encroached
on an area of thirty four (34) square meters of DEPRA's property, After the encroachment was
discovered in a relocation survey of DEPRA's lot made on November 2,1972, his mother, Beatriz Depra
after writing a demand letter asking DUMLAO to move back from his encroachment, filed an action for
Unlawful Detainer on February 6,1973 against DUMLAO in the Municipal Court of of Dumangas,
docketed as Civil Case No 1, Said complaint was later amended to include DEPRA as a party plain.
plaintiff.
After trial, the Municipal Court found that DUMLAO was a builder in good faith, and applying Article 448
of the Civil Code, rendered judgment on September 29, 1973, the dispositive portion of which reads:
Ordering that a forced lease is created between the parties with the plaintiffs, as
lessors, and the defendants as lessees, over the disputed portion with an area of
thirty four (34) square meters, the rent to be paid is five (P5.00) pesos a month,
payable by the lessee to the lessors within the first five (5) days of the month the
rent is due; and the lease shall commence on the day that this decision shall have
become final.
From the foregoing judgment, neither party appeal so that, ff it were a valid judgment, it would have
ordinarily lapsed into finality, but even then, DEPRA did not accept payment of rentals so that DUMLAO
deposited such rentals with the Municipal Court.
On July 15,1974, DEPRA filed a Complaint for Quieting of Title against DUMLAO before the then Court of
First Instance of Iloilo, Branch IV (Trial Court), involving the very same 34 square meters, which was the
bone of contention in the Municipal Court. DUMLAO, in his Answer, admitted the encroachment but
alleged, in the main, that the present suit is barred by res judicata by virtue of the Decision of the
Municipal Court, which had become final and executory.
After the case had been set for pre-trial, the parties submitted a Joint Motion for Judgment based on the
Stipulation of Facts attached thereto. Premised thereon, the Trial Court on October 31, 1974, issued the
assailed Order, decreeing:
WHEREFORE, the Court finds and so holds that the thirty four (34) square meters
subject of this litigation is part and parcel of Lot 685 of the Cadastral Survey of
Dumangas of which the plaintiff is owner as evidenced by Transfer Certificate of
Title No. 3087 and such plaintiff is entitled to possess the same.
Without pronouncement as to costs.
SO ORDERED.
Rebutting the argument of res judicata relied upon by DUMLAO, DEPRA claims that the Decision of the
Municipal Court was null and void ab initio because its jurisdiction is limited to the sole issue of
possession, whereas decisions affecting lease, which is an encumbrance on real property, may only be
rendered by Courts of First Instance.
Addressing out selves to the issue of validity of the Decision of the Municipal Court, we hold the same to
be null and void. The judgment in a detainer case is effective in respect of possession only (Sec. 7, Rule
70, Rules of Court). 1The Municipal Court over-stepped its bounds when it imposed upon the parties a
situation of "forced lease", which like "forced co-ownership" is not favored in law. Furthermore, a lease
is an interest in real property, jurisdiction over which belongs to Courts of First Instance (now Regional
Trial Courts) (Sec. 44(b), Judiciary Act of 1948; 2 Sec. 19 (2) Batas Pambansa Blg. 129). 3 Since the
Municipal Court, acted without jurisdiction, its Decision was null and void and cannot operate as res
judicata to the subject complaint for Queting of Title. Besides, even if the Decision were valid, the rule
on res judicata would not apply due to difference in cause of action. In the Municipal Court, the cause of
action was the deprivation of possession, while in the action to quiet title, the cause of action was based
on ownership. Furthermore, Sec. 7, Rule 70 of the Rules of Court explicitly provides that judgment in a
detainer case "shall not bar an action between the same parties respecting title to the land. " 4
Conceded in the Stipulation of Facts between the parties is that DUMLAO was a builder in good faith.
Thus,
8. That the subject matter in the unlawful detainer case, Civil Case No. 1, before
the Municipal Court of Dumangas, Iloilo involves the same subject matter in the
present case, the Thirty-four (34) square meters portion of land and built thereon
in good faith is a portion of defendant's kitchen and has been in the possession of
the defendant since 1952 continuously up to the present; ... (Emphasis ours)
Consistent with the principle that our Court system, like any other, must be a dispute resolving
mechanism, we accord legal effect to the agreement of the parties, within the context of their mutual
concession and stipulation. They have, thereby, chosen a legal formula to resolve their dispute to appeal
ply to DUMLAO the rights of a "builder in good faith" and to DEPRA those of a "landowner in good faith"
as prescribed in Article 448. Hence, we shall refrain from further examining whether the factual
situations of DUMLAO and DEPRA conform to the juridical positions respectively defined by law, for a
"builder in good faith" under Article 448, a "possessor in good faith" under Article 526 and a "landowner
in good faith' under Article 448.
In regards to builders in good faith, Article 448 of the Civil Code provides:
ART. 448. The owner of the land on which anything has been built sown or planted in good faith,
shall have the right
to appropriate as his own the works, sowing or planting, after payment of the
indemnity provided for in articles 546 and 548, or
to oblige the one who built or planted to pay the price of the land, and the one
who sowed, the proper rent.
However, the builder or planter cannot be obliged to buy the land if its value is
considerably more than that of the building or trees. In such case, he shall pay
reasonable rent, if the owner of the land does not choose to appropriate the
building or trees after proper indemnity. The parties shall agree upon the terms of
the lease and in case of disagreement, the court shall fix the terms thereof
(Paragraphing supplied)
Pursuant to the foregoing provision, DEPRA has the option either to pay for the encroaching part of
DUMLAO's kitchen, or to sell the encroached 34 square meters of his lot to DUMLAO. He cannot refuse
to pay for the encroaching part of the building, and to sell the encroached part of his land, 5 as he had
manifested before the Municipal Court. But that manifestation is not binding because it was made in a
void proceeding.
However, the good faith of DUMLAO is part of the Stipulation of Facts in the Court of First Instance. It
was thus error for the Trial Court to have ruled that DEPRA is "entitled to possession," without more, of
the disputed portion implying thereby that he is entitled to have the kitchen removed. He is entitled to
such removal only when, after having chosen to sell his encroached land, DUMLAO fails to pay for the
same. 6 In this case, DUMLAO had expressed his willingness to pay for the land, but DEPRA refused to
sell.
The owner of the building erected in good faith on a land owned by another, is
entitled to retain the possession of the land until he is paid the value of his
building, under article 453 (now Article 546). The owner of the land, upon the
other hand, has the option, under article 361 (now Article 448), either to pay for
the building or to sell his land to the owner of the building. But he cannot as
respondents here did refuse both to pay for the building and to sell the land and
compel the owner of the building to remove it from the land where it erected. He
is entitled to such remotion only when, after having chosen to sell his land. the
other party fails to pay for the same (italics ours).
We hold, therefore, that the order of Judge Natividad compelling defendants-
petitioners to remove their buildings from the land belonging to plaintiffs-
respondents only because the latter chose neither to pay for such buildings nor to
sell the land, is null and void, for it amends substantially the judgment sought to
be executed and is. furthermore, offensive to articles 361 (now Article 448) and
453 (now Article 546) of the Civil Code. (Ignacio vs. Hilario, 76 Phil. 605,
608[1946]).
A word anent the philosophy behind Article 448 of the Civil rode.
The original provision was found in Article 361 of the Spanish Civil Code; which provided:
ART. 361. The owner of land on which anything has been built, sown or planted in
good faith, shall have the right to appropriate as his own the work, sowing or
planting, after the payment of the indemnity stated in Articles 453 and 454, or to
oblige the one who built or planted to pay the price of the land, and the one who
sowed, the proper rent.
As will be seen, the Article favors the owner of the land, by giving him one of the two options mentioned
in the Article. Some commentators have questioned the preference in favor of the owner of the land, but
Manresa's opinion is that the Article is just and fair.
. . . es justa la facultad que el codigo da al dueno del suelo en el articulo 361, en el
caso de edificacion o plantacion? Algunos comentaristas la conceptuan injusta, y
como un extraordinario privilegio en favor de la propiedad territorial. Entienden
que impone el Codigo una pena al poseedor de buena fe y como advierte uno de
los comentaristas aludidos 'no se ve claro el por que de tal pena . . . al obligar al
que obro de buena fe a quedarse con el edificio o plantacion, previo el pago del
terreno que ocupa, porque si bien es verdad que cuando edifico o planto
demostro con este hecho, que queria para si el edificio o plantio tambien lo es que
el que edifico o planto de buena fe lo hizo en la erronea inteligencia de creerse
dueno del terreno Posible es que, de saber lo contrario, y de tener noticia de que
habia que comprar y pagar el terreno, no se hubiera decidido a plantar ni a
edificar. La ley obligandole a hacerlo fuerza su voluntad, y la fuerza por un hecho
inocente de que no debe ser responsable'. Asi podra suceder pero la realidad es
que con ese hecho voluntario, aunque sea inocente, se ha enriquecido
torticeramente con perjuicio de otro a quien es justo indemnizarle,
En nuestra opinion, el Codigo ha resuelto el conflicto de la manera mas justa y
equitativa y respetando en lo possible el principio que para la accesion se
establece en el art. 358. 7
Our own Code Commission must have taken account of the objections to Article 361 of the Spanish Civil
Code. Hence, the Commission provided a modification thereof, and Article 448 of our Code has been
made to provide:
ART. 448. The owner of the land on which anything has been built, sown or
planted in good faith, shall have the right to appropriate as his own the works,
sowing or planting, after payment of the indemnity provided for in articles 546 and
548, or to oblige the one who built or planted to pay the price of the land, and the
one who sowed, the proper rent. However, the builder or planter cannot be
obliged to buy the land if its value is considerably more than that of the building or
trees. In such case, he shall pay reasonable rent, if the owner of the land does not
choose to appropriate the building or trees after proper indemnity. The parties
shall agree upon the terms of the lease and in case of disagreement, the court
shall fix the terms thereof.
Additional benefits were extended to the builder but the landowner retained his options.
The fairness of the rules in Article 448 has also been explained as follows:
 Where the builder, planter or sower has acted in good faith, a conflict of rights
arises between the owners, and it becomes necessary to protect the owner of the
improvements without causing injustice to the owner of the land. In view of the
impracticability of creating a state of forced co-ownership, the law has provided a
just solution by giving the owner of the land the option to acquire the
improvements after payment of the proper indemnity, or to oblige the builder or
planter to pay for the land and the sower to pay for the proper rent. It is the
owner of the land who is authorized to exercise the option, because his right is
older, and because, by the principle of accession, he is entitled to the ownership of
the accessory thing. (3 Manresa 213; Bernardo vs. Bataclan, 37 Off. Gaz. 1382; Co
Tao vs. Chan Chico, G.R. No. 49167, April 30, 1949; Article applied: see Cabral, et al
vs. Ibanez [S.C.] 52 Off. Gaz. 217; Marfori vs. Velasco, [C.A.] 52 Off. Gaz. 2050). 8
WHEREFORE, the judgment of the trial Court is hereby set aside, and this case is hereby ordered
remanded to the Regional Trial Court of Iloilo for further proceedings consistent with Articles 448 and
546 of the Civil Code, as follows:
reached by the parties, the trial Court, within fifteen (15) days from and after the
termination of the said period fixed for negotiation, shall then fix the terms of the
lease, provided that the monthly rental to be fixed by the Court shall not be less
than Ten Pesos (P10.00) per month, payable within the first five (5) days of each
calendar month. The period for the forced lease shall not be more than two (2)
years, counted from the finality of the judgment, considering the long period of
time since 1952 that DUMLAO has occupied the subject area. The rental thus fixed
shall be increased by ten percent (10%) for the second year of the forced lease.
DUMLAO shall not make any further constructions or improvements on the
kitchen. Upon expiration of the two-year period, or upon default by DUMLAO in
the payment of rentals for two (2) consecutive months, DEPRA shall be entitled to
terminate the forced lease, to recover his land, and to have the kitchen removed
by DUMLAO or at the latter's expense. The rentals herein provided shall be
tendered by DUMLAO to the Court for payment to DEPRA, and such tender shall
constitute evidence of whether or not compliance was made within the period
fixed by the Court.

c) In any event, DUMLAO shall pay DEPRA an amount computed at Ten Pesos
1. The trial Court shall determine
(P10.00) per month as reasonable compensation for the occupancy of DEPRA's
land for the period counted from 1952, the year DUMLAO occupied the subject
a) the present fair price of DEPRA's 34 square meter area of land; area, up to the commencement date of the forced lease referred to in the
preceding paragraph;
b) the amount of the expenses spent by DUMLAO for the building of the kitchen;
d) The periods to be fixed by the trial Court in its Precision shall be inextendible,
c) the increase in value ("plus value") which the said area of 34 square meters may and upon failure of the party obliged to tender to the trial Court the amount due
have acquired by reason thereof, and to the obligee, the party entitled to such payment shall be entitled to an order of
execution for the enforcement of payment of the amount due and for compliance
with such other acts as may be required by the prestation due the obligee.
d) whether the value of said area of land is considerably more than that of the
kitchen built thereon.
No costs,

2. After said amounts shall have been determined by competent evidence, the Regional, Trial Court shall
render judgment, as follows: SO ORDERED.

a) The trial Court shall grant DEPRA a period of fifteen (15) days within which to
exercise his option under the law (Article 448, Civil Code), whether to appropriate
the kitchen as his own by paying to DUMLAO either the amount of tile expenses
spent by DUMLAO f or the building of the kitchen, or the increase in value ("plus
value") which the said area of 34 square meters may have acquired by reason
thereof, or to oblige DUMLAO to pay the price of said area. The amounts to be
respectively paid by DUMLAO and DEPRA, in accordance with the option thus
exercised by written notice of the other party and to the Court, shall be paid by
the obligor within fifteen (15) days from such notice of the option by tendering the
amount to the Court in favor of the party entitled to receive it;

b) The trial Court shall further order that if DEPRA exercises the option to oblige
DUMLAO to pay the price of the land but the latter rejects such purchase because,
as found by the trial Court, the value of the land is considerably more than that of
the kitchen, DUMLAO shall give written notice of such rejection to DEPRA and to
the Court within fifteen (15) days from notice of DEPRA's option to sell the land. In
that event, the parties shall be given a period of fifteen (15) days from such notice
of rejection within which to agree upon the terms of the lease, and give the Court
formal written notice of such agreement and its provisos. If no agreement is